In an earlier post, I compared the stimulus package to the infamous “Bridge to Nowhere” project in terms of job creation per dollar spent. I concluded that the stimulus was about 20% more efficient than the Ketchikan-Gravina Bridge. I WAS WRONG. I was comparing apples to oranges: based on data, I assumed the bridge project would employ 470 people in its construction — I did not take into account the multiplier effect of those jobs (the fact that construction materials purchased and the wages spent by those workers directly employed in the project will indirectly generate other jobs). On the other hand, the Congressional Budget Office estimate takes into account multiplier effect in assessing the stimulus bill’s impact. To put the comparisons on a level playing field, I assume a multiplier of 1.76 (cited here, but seems to be representative of the estimates I can find for construction job multipliers), which indicates that the Bridge project would have generated a total of 827 jobs.
Updating the calculations for the “trimmed” package:
Stimulus: $789 Billion / 2.6 Million jobs (mid-point of CBO estimates) = $303,462 per job created
Bridge to Nowhere: $190 Million / 827 jobs = $229,746
Obviously, there’s lots of rough estimates in these calculations, but it is ironic that a widely heralded example of horrendous government waste, when compared to the stimulus package, is actually more efficient.. Maybe “ironic” isn’t the right word. Sad? Shameful? Embarrassing? You pick.
Tags: stimulus package